By Dan BerthiaumeA rapidly evolving “knowledge economy,” where creativity, innovation and agility trump traditional models of growth and change, could reshape how BPO projects are implemented and managed. …

MIT's ITO: Standards and process essential elements in next wave of innovation

By Dan BerthiaumeA rapidly evolving “knowledge economy,” where creativity, innovation and agility trump traditional models of growth and change, could reshape how BPO projects are implemented and managed. A panel of academics and experts affiliated with MIT discussed the radical shifts occurring in the economic and business landscape during a session entitled “MIT’s Perspective on the Untethered Organization” during the recent MIT Sloan CIO Symposium held in Cambridge, MA.

‘Superstar’ Economy Offers ‘Lumpy’ Rewards

According to Professor Erik Brynjolfsson, Schussel Family Professor of Management at MIT Sloan, the world is entering a “superstar” economy which offers “lumpy” rewards to the best and brightest. “A few people can scale their talents and creativity to make billions of dollars,” he said. “And those who are slightly less creative may be left with no job whatsoever. This reorganization of the economy will happen whether we want it to or not.”

Even for those skilled enough to obtain rewards in the new economy, Brynjolfsson said they will be “lumpy” rewards, or rewards that come in bursts followed by periods of slow activity, such as commonly experienced in the venture capital sector.

“The current employment model is not a good fit,” said Brynjolfsson. “In the future there will be volatility, a lot of winners and losers.”

Future Employment Model May Resemble Crowdsourcing

Agreeing with Brynjolfsson’s assessment of an evolving “lumpy” economic reward system, Professor Anant Agarwal, director of MIT CSAIL, said that successful innovators may be able to help those around them. “If a blogger gets famous, it creates an ecosystem from which many may benefit,” he said.

Of particular interest to managers of BPO projects, Agarwal said for project management, this means managers should focus on creating “scaffolding” for innovation based on open source APIs. “The interfaces allow anyone in the world to contribute to the structure and organic growth,” he said. “The interfaces are key. They must be centralized, otherwise you get chaos.” MIT Media Lab Director Joichi Ito said the complexity and scale of modern projects have moved beyond the capacity of any one mind to fully comprehend, according to Ito. “Interfaces and standards allow you to create a culture and process” based on contributing to and improving the project, and also to build a knowledge base that can then support future projects.

At its best, Brynjolfsson said this model, which like crowdsourcing draws on the expertise of many dispersed individuals who may not even have been initially part of a project, creates “recombinant innovation.”

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“You don’t use up your innovation stock,” he stated. “You add to the stock so other innovation can be added on top. With interfaces you can mix and match more raw materials and create infinite combinations.”

A BPO-centric Future

The evolving economy described by panelists is one with few guaranteed jobs or safety nets (Ito even termed career ladders or employment guarantees as “unnatural”), and one where agility and innovation matter more than any individual employee or corporate asset. Add in the innovation API model discussed above, where business projects are opened to near-universal input and innovation (with centralized controls), and the future of work sounds like it will center on BPO, probably performed by creative individuals competing in an open ideas market more than by large outsourcing firms.

Aspects of the economy described by the panelists are already in place (the “superstars” are more familiarly known as the “1%”), and it seems likely other predictions will come true. However, BPO practitioners and provider should not assume every prediction made will happen – remember the near-universal predictions of a recession-free Internet-based economy made by esteemed experts in the late 1990s? They should, though, prepare for a future where BPO is both more prevalent and more open, and where innovation from all sources is welcomed and encouraged.